Amazon Launches Card Reader

August 20, 2014
Amazon Card Reader

Although Amazon is ubiquitous with online shopping, the online retailer has decided to jump into the mobile card reader space to compete with Square and PayPal. It's recently launched Amazon Local Register, a card reader and mobile app geared toward small businesses.

Much like its competitors, this product consists of a card reader that can plug into a smartphone or tablet in order to accept major credit and debit cards. It's geared toward small businesses, particularly local businesses, to provide an affordable way to accept credit cards beyond the traditional card processing services.

"From clothing stores to contractors, food trucks to accountants, businesses and organizations using Amazon Local Register will enjoy industry-leading low rates, trusted and secure payment processing, and access to award-winning customer support," said Matt Swann, Vice President of Amazon Local Commerce, in a statement. "We understand that every penny and every minute counts, so we want to make accepting payments so easy and inexpensive that it no longer gets in the way of a business owner doing what they love - serving their customers and growing their business."

Implementing this product involves purchasing a $10 card reader either online from Amazon or at Staples stores and downloading the free mobile app that goes along with it. Amazon refunds that $10 by giving customers a $10 credit in transaction fees once they activate their account. Customers can choose to take the funds they receive by swiping cards in the reader in the form of money that's deposited directly to a bank account, or in credit that they can spend at

Although Amazon is a latecomer to the field, it's offering enticing low rates in order to attract adopters. Customers registering before the end of October will only pay 1.75 percent in fees per card swipe through the end of 2015. Those who sign up after October 31 will pay 2.5 percent per card swipe.

One of the reasons smaller payment systems have taken hold in the marketplace is because they charge less in fees than the traditional credit card companies, and their fee structure is simpler. MasterCard for example, breaks out percentage fees based on the type of business and a number of other constraints that involve whether or not a customer uses a PIN with a debit card transactions and whether or not there's a fraud adjustment charge.

Mobile card readers have bypassed a lot of the complexity of these fee structures and have gone with a flat percentage per card swipe. Amazon's trying hard not to lose to the competition--its 2.5 percent fee is lower than Square's 2.75 percent swipe fee and PayPal's 2.7 percent per swipe transaction. If merchants need to key in the card, the fees are a slightly higher 2.75 percent, but that rate is still lower--and a little simpler--than its direct competitors, who both charge 3.5 percent plus 15 cents per transaction.

Amazon Local Register is compatible with iPhones that run iOS 7.0 or higher and Android OS 4.0.4 or higher. It's optimized for several versions of iPhones and Samsung Galaxy S3, S4 and S5, though it may also work on other Android devices. Additionally, it will work with Amazon's Kindle Fire HD and HDX tablets and the iPad and iPad Mini. To test other devices, interested users can download the app and test it by keying in card data, which you can do without swiping.

Initial customer reviews on Amazon Local Register have been mixed, with some customers finding the system easy to set up and the low fees a bonus, while others have had difficulty setting up their accounts and getting the cards to read. Whether or not these are indicative of the overall quality of the product and whether Amazon can be a stiff competitor to Square and PayPal remains to be seen.

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